What you have to know is that there are thousands of people out there who made windfall gains during the rise of bitcoin and the others. Say you bought or mined 100 bitcoins back when they were a dollar, and somehow didn't sell - they're worth a million today, on paper.
If you can talk up BTC/blockchain in some public place such that someone notable agrees it's useful - Wales qualifies - the crypto press would go nuts. "Wikipedia founder looking into blockchain!!" - anything to get it back in the press/public consciousness. If you can get it up just 10%, that's on paper $100k.
For thousands of people, this is their motivation. Talking up bitcoin is literally their full time job.
I remember reading an article about Bitcoin where the author pointed out: when you buy some bitcoins, you're buying because you're hoping it will go up and you can sell and make profit in the future. So automatically, you're going to be cheerleading and promoting it, in hopes it rises in value...
This is fundamental to trading/speculating on anything.
Buying a stock/bond/asset comes with the intrinsic belief the value will increase. Being more specific, purchasing any speculative asset comes with the belief that the thing I am buying will increase in value relative to the thing I'm buying it.
The reverse is also true for selling a speculative asset.
Now that that is out of the way. Let's continue cherry picking as you've done and consider traders that specialize in short selling companies they deem as bad market actors. What do high profile short sellers do? They go on all sorts of media rants warning about companies/assets ect TO WARN PEOPLE AND INFORM THEM (legitimate or otherwise) for their own gain.
Cherry picking these ideas with respect to crypto is totally naive.
Some people use BTC to pay for VPNs, drugs, or simply to get cash out of their country. There was a lot of speculation that the big spike in BTC a few years back was the Saudi royalty trying to move cash out before MBS cracked down on them.
99% of Crypto is speculation. 0.5% is darknet markets, 0.25% is crypto ransomware, 0.1% is Saudi princes and rich people moving money out of a country. Somewhere in the remaining fraction of a percentage is legit legal usage.
There are much better ways to move money out of a country than one with locked-down fiat gateways in every first-world country with a fully public ledger. It may for a few thousand dollars but when you're talking Saudi prince money there's much better ways. It's not even good for that lol.
Nope. Assets have a sale value and an ownership value.
Suppose a company makes $100,000 per year and this is expected to continue. How much would you pay for it?
Now, suppose it makes $100,000 per year, but for some reason once you have it, no one will buy it off you. How much would you pay for it?
You'd pay less in the second case, but not that much less. The company has a value which it gives to you for having ownership of it.
Meanwhile, bitcoin produces....$0 per year for owning it. The only value is in sale at a higher price. You have to bet on appreciation.
This is something fundamental people often misunderstand about, say, stocks. The price is set by supply and demand for the stock, but the value is determined by the cashflows. Usually price and value move at least somewhat in sync. But if stock markets went insane and valued everything at $0 for some reason, you'd still want to own companies.
Hypothetical indeed. Hypothetically, ownership value should be close to sale value.
At the moment I rather see people buying stuff that they think other people might deem valuable in the future, e.g. motivation behind buying TSLA is similar to buying BTC.
It’s a hypothetical, where the whole world has gone mad except you. Nobody buys. So it has a price you would purchase at, but $0 sale value to you as there are no other buyers. The true value of an asset is separate from the price (which is $0 in this case as you can’t sell it)
A thought experiment to show the difference between price and value. Bitcoin currently has a price. No actual intrinsic value other than the hope of value in the future.
I think it does have intrinsic value - that value lies in allowing some people, in some areas, to circumvent tracking or avoid authorities. To those people, BTC brings value which cannot be had elsewhere. My personal belief is that this is what fuels BTC's value, and the rest is speculation (but then it's similar to stocks).
I don't think that whether it has this property (and value) is in question - the question is how much of BTC's price is fueled by that value.
What about a company which grows every year but never pays dividends and can't be sold for more than $0? Would you want to buy it for $1? ( I prefer to use $1 because $0 has the problem of indifference )
Even if this company owns the whole world at the end, is it worth even $1?
Yes, because then I am entitled to voting rights so that I can force them to give me the money. Usually, voting rights are a tiny fraction of the stock value.
If I get non-voting shares that do not pay dividends, then these aren't shares, they're just useless scraps of paper. If the only utility I can get from them is being able to point out that I "technically" own the entire world, it is indeed useless.
Maybe I'm willing to pay a dollar for it but certainly not two.
> You'd pay less in the second case, but not that much less.
Given the huge amounts of money that investors will invest in companies that make negative money every year, I think this is (perhaps unfortunately) not at all true in the real world.
When you buy (e.g.) real estate you can get value out of it without thinking about selling it for a profit later. Especially if it's your primary residence.
Same with most vehicles: they depreciate over time, but there is utilitarian value in the asset. Unless it's Steve McQueen's Mustang or something.
Yes, but most investment vehicles are assets (or are eventually backed by assets).
Real estate, and the various loans and derivatives, all eventually end up at real, productive assets that you might want to own.
Stocks and the various index funds and derivatives, all eventually end up with ownership of a company. A company which, if profitable, can pay dividends back to the owners.
I'd argue that it's a much rarer class of investment vehicle which is purely speculative.
If you have a house you ever intend to sell, you will also try to make the neighborhood it is in sound more attractive, to increase its sale value, regardless of whether you can extract utility from it.
I bought my house to live in, but it has gone up. Many of the stocks I've invested in I purchased because they pay dividends, and I expect they will continue to in the future. As long as that is true, I don't care if the price of the stock increases much. I have a case of fine wine in my basement, most wine doesn't age well, but some do. I expect these will increase in price... But I'm planning to drink more than a few bottles.
I think the term for this is "market depth". https://bitcoincharts.com/markets/bitstampUSD_depth.html The 3rd chart (and the 4th which is the same thing but zoomed in) shows: if I'm willing to accept as little as X USD / Y BTC exchange rate, how much BTC can I sell? The answer is the area under the curve above the price you're accepting.
If you have a lot more BTC to sell than could comfortably move on exchanges, auctions are the way to go. Sometimes the feds seize large amounts of BTC and auction them off in large blocks, and they not only sell but they go for above then-current exchange rates.
I think you can do $50-100m in a 24hour period without spooking the market much; that's on regular exchanges. Not sure about the depth of the market where they trade in blocks via some brokers.
You’ll have to split this amount between 7-10 exchanges. That becomes 5-10m/exchange. Coinbase volume today was $150m. $5m should be feasible over 24hours and btc trades 24/7.
Nobody. You’ll never find an answer and just get mumbles. The truth is crypto trading in actual USD (not tether) is super thin. Everything else is smoke and mirrors.
I actively trade these markets, so I have some insights. While I didn’t do $50m-$100m on a single day, I’m judging by market depth on the different exchanges I trade at.
There many small fish trading with a small ($500k-$1m) capital on a 3-5x leverage. They can do some days 5-10m of volume in usd.
Are you trading in actual dirty government fiat (USD) or fake tether (USDT)? There is a huge difference. And also note that some of the larger exchanges aren’t very upfront about which currency you are actually trading in...
Check out listings on localbitcoins for your region. It's worked well for me in the past (keeping transactions off public exchanges). In my city, it's been trivial to move $20k dollars in a couple hours.
Big amounts, like 25M+ are usually done OTC. Several big companies in the space offer this service and are able to link you with one or multiple buyers to offload 9 digits.
You can easily offload 10M USD worth over 10-20 minutes without having a big effect on the overall market.
Can you link to an exchange that a) has the book depth to handle 10M USD currently and b) has a straightforward way to then move the cash position into a US bank in the same timeframe as an ACH?
It has been years since I looked but that wasn’t available when I did. It would be a positive sign for the maturity of the market.
At this moment, on Coinbase, you can instantly sell approximately 1000 BTC for $9.91M - about 4% under the mid market price against what is on the book. Assuming you are a US person (since you want to move the money to a US bank) and have no problem complying with their KYC policies, you should be able to get the money a day or two if you chose to accept a wire instead of an ACH. Just for comparison, for ACH in particular since you mention it, most traditional trading institutions (etrade, schwab, ameritrade) limit your ACH transfers to 250k/day - coinbase does as well last I checked. So you'd get your money about 10x as fast as if you tried to do it via ACH. Wires are typically unlimited.
Coinbase has a $10k per day withdrawal limit. You have to contact them to get more. They don't specify how difficult or time consuming that process is.
OTC desks are different than exchanges, and you won't be able to see their books. There are also trading algos meant to push things through the market without being noticed. Of course it comes at a cost, you'll usually pay a discount (up to 5% or so ) to unload a large amount of crypto.
Crypto is an unregulated wild west, so these OTC desks typically don't have BD licenses, might do prop trading and be the counterparty to your transaction and take your position on their books (and then try to unload it themselves at a profit), or might match trades with their own customer lists. It's typically a pretty low-tech operation running on chat rooms.
Market selling that much Bitcoin in one place isn't quite possible right now, but you could do this in a day on Coinbase and get real dollars in your bank account. If you split it up and sold some on other exchanges like Kraken you could reduce the time required to sell it. You could also trade the BTC for other popular assets like ETH on exchanges without fiat markets then sell that off on exchanges that do.
CMC reports around $37B in global BTC volume right now, but the real figure is probably $2.5 - 3B, and of that it's fragmented in different fiat currencies with different restrictions on where those exchanges are able to send money. So while it's certainly not nothing and it's better than years ago, it's like a quarter of the average daily volume of shares in a single company like Apple.
Oh right. The mysterious “OTC market” that somehow lets people unload their massive gains without affecting the market. Yeah right. $10 million of actual US currency is going to have a massive effect on the BTC market regardless of how it was traded.
If you could somehow unload massive amounts of BTC without affecting the market it would be arbitraged away almost instantly.
People who suggest that it is possible to unload BTC without impacting the market don’t understand finance at all. Not understanding finance, economics, math, computer science, politics and monetary theory is par for course for most BTC supporters.
It’s an illiquid market, I remember during the peak I needed to unload amounts several orders of magnitude lower than the amounts being discussed here. It was not as easy or straightforward as some would have you believe on here. What kind of a fool would trade real world fiat currency for an asset as volatile as Bitcoin? That’s the real question that should be asked.
A lot of places can't do more than 10k a day. So you either try and sell at the peak and eat the risk of them going under, or you sell continuously and leave a lot of money on the table because price fluctuates week to week.
And all of that made logical sense to me, but it wasn't until I took a job in the crypto space that I appreciated, viscerally, the extent to which it was happening. Dozens of Twitter accounts deriding other projects in the space as shitcoins 24/7. "Bitcoin is 100% not a scam and every other crypto project is 100% a scam" is somehow a position that's taken seriously by sheer memetic force of will. It's wild.
Such a scam that more than %90 of it's entire price history made profit for anyone that bought it. Such a scam that you don't need any permission to sell or buy and gives you a returns that are not possible in any asset for public. It might not be the best store of value all the time or similar but in certain time frames, it's risk/reward ratio is beyond anything that's exist in investment world. Especially for public.
While I agree about the concept, I think Bitcoin has jumped the shark on this one. It's hopeless to get it to bounce 10% with just that. It still works with alts that their market cap is small and are fairly non-liquid.
If you can talk up BTC/blockchain in some public place such that someone notable agrees it's useful - Wales qualifies - the crypto press would go nuts. "Wikipedia founder looking into blockchain!!" - anything to get it back in the press/public consciousness. If you can get it up just 10%, that's on paper $100k.
For thousands of people, this is their motivation. Talking up bitcoin is literally their full time job.